Blog Post

Google Ratchets Back On Spending, New Projects; Buys Futures In Six Sigma

Nothing says serious about cost cutting and process quite like hiring a CFO with a black belt in Six Sigma management. With or without the tanking economy, Google (NSDQ: GOOG) has been heading towards maturing growth — you can’t keep up triple-digit growth or even double-digits indefinitely — and the addition of McKinsey vet and Bell Canada planning exec Patrick Pichette as CFO in August was one sign that cost containment was on the way. The slowing of online ad growth coupled with the unexpected speed of the economic downturn has only accelerated Google’s need to show maturity of a different sort. That would explain this long WSJ article about how Google is taking the responsible approach by cutting back on its ubiquitous product approach — along with some of the food perks and redundant offices. CEO Eric Schmidt told the Journal Google has to “behave as though we don’t know” what’s coming. That means cutting what Schmidt calls the “dark matter” — “projects that ‘haven’t really caught on’ and ‘aren’t really that exciting.'” Engineers may still get their 20 percent time but staffing and resources for their projects, particularly those without signs of real revenue potential, will be much harder to come by. Google needs hits that make money, not just headlines. More after the jump.

— Narrow investment focus: The top priorities include display and mobile advertising and Google Apps. Schmidt told the Journal engineers and sales resources are being diverted to those areas. The paper reports that projects at risk include Google Notebook and Google Audio Indexing.

— Adding ads: Google hasn’t started selling the classic front page — some of the most expensive real estate left online. But it has added advertising to Google Finance and will add it in some parts of Google News.

— Hiring (firing): Hiring continues but at a much slower pace. Google execs said this fall that the company would cut back on contract workers, then numbering about 10,000. Still no specifics.